Loan to Friend-what shall I do?

Mr_bob

My wife has offered a £3k loan to her friend to help towards buying a house. Only after the friend had asked for the loan, I was told. I am dead against it as i feel you mustn't mix money and friends. We have the money and can afford it (and to lose it). The friend has offered to get a solicitor to create an agreement for the loan but Im still totally against it. Am I being mean and stubborn or is my wife being a very good friend and this is the right thing to do ? To say no now may jeopardise the buying of the property- thats my dilemma?

I welcome some advice please..

to quote Shakespeare ....
Polonius (a Lord) to his son Laertes:
"Neither a borrower nor a lender be,
For loan oft loses both itself and friend."

[Deleted User]

I wouldn't. And if it's for a deposit, then it won't be accepted by the lender. But each to their own.

To quote Dirty Harry...

"What you've got to ask yourself is...are you feeling lucky? Well, are you...punk?"

PeacefulWaters

I wouldn't go near it.

One of the easiest ways to lose £3,000 and a friend.

It's also unlikely to be accepted as a deposit by a mortgage lender.

glennstar

Make a gift of the money so that it isn't gnawing away at everyone. If the friend is good for their word (you never know) they will reciprocate (monetary or otherwise) in the future. Either way you don't want the inevitable loss of £3k to become a problem between you and your wife - which is where this looks like it is going.

Solicitor's lettre, phf!

Mr_bob

glennstar wrote: »

Solicitor's lettre, phf!

thank you for the advice..

Could you please tell me what this means?

HighamKneeDee

I personally would not loan anything, any longer, to anybody. I have tried to be helpful and have loaned up to £1k to my 'close' niece before, only to find she was reluctant to pay back, we rarely talk now. I recently loaned to a friend and he is proving difficult too. In my experience, when I think of all the persons I have loaned to interest free over the years, each has at minimum needed one prompt when you discover weeks later they are missing payments. They appear to take your 'kind-heartedness' as a signal that you are there to be 'ripped off'.

PeacefulWaters

Mr_bob wrote: »

thank you for the advice..

Could you please tell me what this means?

Banks have legally binding loan agreements. Some customers don't pay back.

A solicitor's letter may prove the debt but it doesn't guarantee it.

AnotherJoe

The advice about these things is generally, "don't loan unless you never expect to see the money again". As you seem to be in a position where you could lose this money that is a possible route, you loan it, regard it as lost and have an informal agreement she will repay.

You will almost certainly have to sign a document stating it's a gift without reservations anyway, so the idea of a signed agreement that she will repay it is likely a non starter unless the agreement is she doesn't repay until she sells the house but that will narrow the lenders down dramatically.

Do you know the reasoning behind her needing this £3,000 and the timeframe? Sometimes people need a loan like this to get them over a temporary blip but since mortgage will be less than rent they will then be in a good position, or they could be stretchimg themselves to the limit to buy a dream house or it could be perfectly reasonable because pay rise coming and it's a timing issue.

So, in summary I wouldnt be as dead against this as most here, it's a relatively small amount, but I'd still like to see an explanation of why such a small sum is needed, what the repayment schedule is expected to be, and if she understands you will have to sign an agreement giving it to her which in essence is a lie.

Mr_bob

AnotherJoe wrote: »

The advice about these things is generally, "don't loan unless you never expect to see the money again". As you seem to be in a position where you could lose this money that is a possible route, you loan it, regard it as lost and have an informal agreement she will repay.

You will almost certainly have to sign a document stating it's a gift without reservations anyway, so the idea of a signed agreement that she will repay it is likely a non starter unless the agreement is she doesn't repay until she sells the house but that will narrow the lenders down dramatically.

Do you know the reasoning behind her needing this £3,000 and the timeframe? Sometimes people need a loan like this to get them over a temporary blip but since mortgage will be less than rent they will then be in a good position, or they could be stretchimg themselves to the limit to buy a dream house or it could be perfectly reasonable because pay rise coming and it's a timing issue.

So, in summary I wouldnt be as dead against this as most here, it's a relatively small amount, but I'd still like to see an explanation of why such a small sum is needed, what the repayment schedule is expected to be, and if she understands you will have to sign an agreement giving it to her which in essence is a lie.

She only called yesterday and spoke with my wife. I woke this morning angry as hell to be put in this position. Im not sure what the money o=is for, I guess its to bulk up the deposit but Im not really sure. i will put further comments on here for comment.

AnotherJoe

Seems to me if you are looking for a way out without impacting your wife's friendship (though most friends wouldn't want to borrow such a sum from a friend) you could use the fact you'd in essence be committing some sort of fraud by stating on a legal document it's a gift when it's not a gift, as an excuse.

The possible "real" issue here might also be your relationship with your wife ? Is that really what's underlying this, that she's agreed to this "off the cuff" without conferring with you and putting you in a difficult position ? And also this comes down to what friendship means, I'd say a real friend, unless they are either totally dizzy or utterly desperate (which speaks volumes about chances of getting money back) would not put a friend in such a position.

Unless it's all your wife's money ? I know some couples have his and her money's in which case it's down to her and it may be a learning experience for her. But then I guess you would,not be involved expect re giving advice rather than getting si angry over it. Regards your anger, to coin a phrase "calm down calm down" . No one died. Have a rational calm discussion with your wife and find out the facts.

Mr_bob

AnotherJoe wrote: »

Seems to me if you are looking for a way out without impacting your wife's friendship (though most friends wouldn't want to borrow such a sum from a friend) you could use the fact you'd in essence be committing some sort of fraud by stating on a legal document it's a gift when it's not a gift, as an excuse.

The possible "real" issue here might also be your relationship with your wife ? Is that really what's underlying this, that she's agreed to this "off the cuff" without conferring with you and putting you in a difficult position ? And also this comes down to what friendship means, I'd say a real friend, unless they are either totally dizzy or utterly desperate (which speaks volumes about chances of getting money back) would not put a friend in such a position.

Unless it's all your wife's money ? I know some couples have his and her money's in which case it's down to her and it may be a learning experience for her. But then I guess you would,not be involved expect re giving advice rather than getting si angry over it. Regards your anger, to coin a phrase "calm down calm down" . No one died. Have a rational calm discussion with your wife and find out the facts.

You are more or less , spot on. Thanks you for clarifying it.
Our money is shared and normally we discussed everything so Im angry for not being told, for sure. I will use the fraud line as a way out
I have asked the friend to call me tonight, lets see where that goes?